How to Become a Foreign Business in Delaware

Find out how to qualify your LLC to conduct business in Delaware.

If you own a company that was formed in a state other than Delaware, you must qualify or register it in Delaware in order to conduct business there. The requirements for qualifying your foreign (non-Delaware) limited liability corporation (LLC) to conduct business in Delaware are summarized here.

What exactly is a Foreign LLC?

If your LLC was founded in another state, it is referred to as a foreign LLC in Delaware. In other words, being foreign does not imply being from another nation. Instead, it signifies that your company was formed under the laws of another state. A domestic LLC, on the other hand, is one that is created in the state in which it operates. This is a prevalent phrase in the United States. In Colorado, for example, an LLC founded in Arizona is a foreign LLC.

Investing in Delaware

If you are “doing business” in Delaware, you must register your foreign company with the state, according to Delaware’s LLC Act. What exactly does this mean? When applied to a foreign LLC, the words “doing business,” “doing of business,” or “business done in this State” mean “the course or practice of carrying on any business activities in the State of Delaware, including, without limiting the generality of the foregoing, the solicitation of business or orders in the State of Delaware.”

State regulations determining whether foreign enterprises are required to collect state sales tax in their state also serve to give direction on the subject of what it means to conduct business. To be obligated to collect state sales tax on sales to citizens of a state, a firm must have a physical presence in, or nexus with, that state. In general, physical presence and nexus are synonymous and refer to:

a storage facility in the state
A shop in the state, an office in the state, or a sales representative in the state are all examples of state-based businesses.

Certain exclusions may apply, and the regulations might become more convoluted in situations such as Internet sales. However, if you have an office, a shop, a warehouse, or workers in another state, you must register your LLC as a foreign corporation in that state.

Some Activities Are Exempt

Delaware’s LLC Act, like other states’, stipulates specific actions that do not constitute conducting business in the state. Among the objects mentioned are:

defending or settling a lawsuit dealing with internal LLC affairs such as holding member or manager meetings having a bank account in the state having an office, agency, or persons in the state for handling your company’s own securities selling through independent contractors soliciting or obtaining orders that require acceptance outside the state before they become contracts

Check Title 6, Section 18-912 of the Delaware Code for a complete legal definition of each of the listed things. The Act further provides that the excluded activities do not apply for evaluating whether an LLC is accountable for taxes, service of process (receiving documents connected to litigation), or other requirements under Delaware law.

If your LLC’s only operation in Delaware is one or more of the activities mentioned above, you should not be required to register with the state.

Registration Certificate

You must submit a Certificate of Registration of a Foreign Limited Liability Company with the Delaware Division of Corporations to register your firm in Delaware (DOC). The application form may be downloaded on the SOS website.

To complete the form, you must supply the same information that you would need to incorporate an LLC in your home state. In particular, for a Delaware certificate of registration, you must provide:

the name under which your LLC is registered in Delaware (this may vary from the name under which your LLC is registered in its home state if that name or something very similar is already being used by a Delaware registered firm, or the name does not conform with Delaware’s LLC naming requirements)
If different, the name of your LLC as registered in the state where it was formed, the state where your LLC was formed, the date your LLC was formed, a statement of your LLC’s specific purpose in Delaware, the name and street address of your LLC’s registered agent in Delaware, and the date your LLC first did or intends to do business in Delaware.
an authorized signature, and a declaration that the Delaware Secretary of State will serve as your LLC’s registered agent under the conditions stated in Title 6, Section 18-910(b) of the Delaware Code (basically, if your registered agent cannot be identified).

Along with your application, you must attach a proof of existence. The certificate should be granted by the Secretary of State (or a similar entity) in the state in which your LLC was founded. The certificate must be dated within six months of the day your application is filed. The standard filing cost is $200.

What Happens If You Do Not Sign Up?

If your LLC does business in Delaware without authorization, it cannot file a lawsuit there. Your LLC may file a lawsuit only when it has paid all fees and penalties owed for all years and portions of years when it should have been registered. Furthermore, an LLC conducting business in Delaware shall be penalized $200 for each year or portion of a year that it fails to register. However, not being registered does not render your LLC’s obligations null and void or bar it from defending a lawsuit in Delaware. Furthermore, a member of the LLC is not accountable for the LLC’s liabilities just because the corporation did business in Delaware without being registered.

Creating a Delaware Foreign Corporation

The criteria and standards for international qualifying in Delaware are identical whether your company is structured as a corporation rather than an LLC. You must, however, utilize a separate application form (Qualification Certificate of a Foreign Corporation). For paperwork, information, and filing requirements for registering a foreign company in Delaware, see the Delaware Secretary of State’s website.